BRADES, Montserrat – Montserrat has joined other British Overseas Territories who are working to comply with the Foreign Account Tax Compliance Act (FATCA) which both the United Kingdom and the United States are enacting to combat tax evasion and fraud.
Head of the Inland Revenue Division Violet Silcott says the FATCAs with both nations will be enforced by year’s end. This will mean that local banks will be required to automatically present to both countries annual reports about accounts held by their taxpayers in this jurisdiction, including names, addresses, dates of birth, account numbers, account balances and details of payments made into those accounts.
In April, the Government of Montserrat released its statement of agreement to comply with FACTA. It said “Tackling tax evasion and fraud is rightly a global priority, necessary to protect the integrity of public revenues, the confidence of taxpayers in the fairness and effectiveness of their tax systems and, ultimately, public confidence in open global capital markets.
“Despite the increased attention given to tackling evasion and fraud over recent years, in particular through the development of international standards and the Peer Review process by the Global Forum, further action is clearly needed to deter evasion and clamp down on evaders. In this respect the next necessary step, facilitated by rapid developments in technology, is to move to automatic exchange of tax information. The action taken by the United States under its Foreign Account Tax Compliance Act gives a unique opportunity to develop a new global standard in the near future and from that to develop a system of multilateral automatic information exchange,” the statement said.
Silcott said Montserrat is working to enter the automatic exchange of information agreements with the UK on the same timetable as the agreements which are presently being negotiated with the US.
“It is the belief of these countries that they are losing millions and even billions in tax revenues because of accounts being held in the Caribbean by their citizens. Things are changing internationally and other countries are also creating similar agreements to deter this practice of not declaring income from overseas bank accounts,” the tax specialist noted.
She added that the requirements were very extensive and of special interest to the United States are bank accounts with US addresses and those with balances over US$ 50,000.
In its statement on the FACTA, the Government of Montserrat said it was committed to the multilateral automatic exchange of tax information, which will involve other European nations and countries across the globe. “We would also call on other jurisdictions to make similar commitments which will take us to a new level of tax transparency and remove hiding places for those who would seek to evade tax and dodge their responsibilities,” the statement read.
Montserrat also plans to tackle the issue of information sharing and enforcement of rules on beneficial ownership or trusts. “The work of the Global Forum and the Financial Action Task Force has led to significant improvements but there remain gaps in many jurisdictions. We are determined to take forward this agenda and will remain committed to review the effectiveness of their legal and enforcement framework and to produce an Action Plan” on the issue.